UNEMPLOYMENT 101

We’ve all seen the nightly news, and we’ve also heard the current ‘unemployment figure’ in the nation. But do we really know what’s behind that figure?

With a little research, we find that the Bureau of Labor Statistics (BLS), the group in charge of publishing this figure, actually publishes SIX different figures, not just one. The most oft-quoted number is referred to as the ‘U-3’. This is the figure we hear on the nightly news, as it’s dubbed the ‘official unemployment rate’. The U-3 number is the total unemployed, as a percentage of the civilian labor force. But we need to be careful about what we assume is ‘unemployed’. Does this include someone who:

1. is neither working nor looking for work, but indicate that they want and are available for a job and have looked for work sometime in the recent past (example: just 'retired,' but still want to 'do something');

2. has given a job-market related reason for not currently looking for a job (example: laid off from factory, but expecting to be called back in three months); or,

3. is employed part-time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule (example: person who needs to make the rent this month)?

No, no, and no.

To include those, we need to look at the U-6 number. And when we pull these figures historically, we see something else:

In January 1999, the seasonally-adjusted 'U-3' (official unemployment) was 4.3%
Ten years later in January 2009, the seasonally-adjusted 'U-3' was 7.6%

In January 1999, the seasonally-adjusted 'U-6' was 7.7%
Ten years later in January 2009, the seasonally-adjusted 'U-6' was 13.9%

This tells me that not only is unemployment rising by all definitions, many who do not fit the official definition of ‘unemployed’ in the U-3 are on the rise at even a greater upward trend. Moreover, if someone took a part-time job to try to make ends meets, then they are still actually unemployed even though they may not ‘fit’ the U-3 definition that is quoted in the news.

The short of it is this: things are worse than is being reported. Unemployment is not 7.6%, it’s really 13.9%. Reportedly, over time, the ‘unemployment figure’ has evolved to the current U-3 vs. the U-6. So, comparing rates from years back to today is supposedly not accurate. I’ve seen some figures of 25% unemployment thrown around for the Great Depression, so by comparison to the U-6 figure of today of over 13%, we’re more than half-way there!